Lesson 1 exam question 1 5 / 5 points which financial statement

Lesson 1 Exam

Question 1 5 / 5 points

Which financial statement presents the results of operations?

Question options:

Balance sheet

Statement of financial position

Income statement

Statement of cash flows

Question 2 5 / 5 points

Which report is NOT required to be filed by public companies to the SEC?

Question options:

Annual reports (Form 10-K)

Financial Reporting Rulings

A prospectus for any new security offering

Quarterly reports (From 10-Q)

Question 3 5 / 5 points

Why does the management discussion and analysis help the analyst?

Question options:

It contains information that cannot be found in the financial data.

It provides predictions of all future financial statement numbers.

It outlines the accounting choices made by the firm.

It explains the market valuation of the firm’s stock.

Question 4 5 / 5 points

What information can be found on a balance sheet?

Question options:

Information to support that assets equal liabilities

The profit or loss for the accounting period

The reasons for changes in the cash account

The financial position on a particular date; i.e. assets, liabilities and shareholders’ equity

Question 5 5 / 5 points

How are revenues and expenses recognized under the accrual basis of accounting?

Question options:

Revenues are recognized when cash is received and expenses are recognized when cash is paid.

Revenues and expenses are recognized equally over a twelve month period.

Revenues and expenses are recognized based on the choices of management.

Revenues are recognized in the accounting period when the sale is made and expenses are recognized in the period in which they relate to the sale of the product.

Question 6 5 / 5 points

Which of the following is an external source of liquidity?

Question options:

Sales of services

Repurchase of stock


Sales of products

Question 7 5 / 5 points

Which financial statement provides information about operating, financing and investing activities?

Question options:

Statement of financial position

Statement of cash flows

Statement of stockholders’ equity

Income statement

Question 8 5 / 5 points

Which financial statement shows the assets, liabilities and stockholders’ equity of the firm on a particular date?

Question options:

Statement of stockholders’ equity

Statement of cash flows

Earnings statement

Balance sheet

Question 9 5 / 5 points

What does Section 404 of the Sarbanes-Oxley Act of 2002 require?

Question options:

The external auditors must create an adequate internal control structure for the firm being audited.

The external auditors must approve of all internal auditors hired by a firm.

The inclusion of an internal control report in the annual report.

The external auditors need to perform internal audit services.

Question 10 5 / 5 points

What type of audit report indicates that the financial statements have NOT been presented fairly?

Question options:

A disclaimer of opinion

An unqualified report

A qualified report

An adverse opinion

Question 11 5 / 5 points

What organization has the authority to register, inspect, and discipline auditors of all publicly owned companies?

Question options:

Public Company Accounting Oversight Board




Question 12 5 / 5 points

Which of the following is an internal source of liquidity?

Question options:


Sales of stock

Gifts and donations

Sales of products or services

Question 13 5 / 5 points

What type of audit report indicates that the financial statements have been presented fairly?

Question options:

An unqualified report

A disclaimer of opinion

A qualified report

An adverse opinion

Question 14 5 / 5 points

Which agency requires the filing of Form 10-Ks, Form 10-Qs and Form 8-Ks?

Question options:





Question 15 5 / 5 points

According to Section 302 of the Sarbanes-Oxley Act, who must certify the accuracy of the financial statements of a public company?

Question options:

Public Company Accounting Oversight Board


External auditor


Question 16 5 / 5 points

The globalization of business activity has resulted in which of the following?

Question options:

Increased corruption and unethical behavior

A uniform set of accounting rules in all countries

The FASB and IASB working jointly on a project to converge accounting standards

The requirement that U.S. firms use international accounting rules as of 2006

Question 17 5 / 5 points

In what industry would it be expected that companies would spend a significant amount on research and development activities?

Question options:


Clothes retailer


Wholesale distributor of computer parts

Question 18 5 / 5 points

Which of the following statements is true?

Question options:

Foreign firms registered with the SEC may file reports based on IFRS.

U.S. firms registered with the SEC may file reports based on IFRS.

The European Union requires firms to report based on GAAP.

Foreign firms registered with the SEC may file reports based on IFRS only if they reconcile all amounts to GAAP.

Question 19 5 / 5 points

Which of the following items is a discretionary expenditure?

Question options:

Union wages

Factory building to produce inventory



Question 20 5 / 5 points

What basic financial statements can be found in a corporate annual report?

Question options:

Balance sheet, income statement, statement of shareholders’ equity, and statement of cash flows

Balance sheet, auditor’s report and income statement

Earnings statement and statement of retained earnings

Statement of cash flows and five-year summary of key financial data

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